Finance

Decoding: How Your 15 Digit GST Code Is Formed

Clare Louise

The Goods and Services Tax, also known as GST, came into effect in the year 2017, July 1, 2017, to be precise. It is a form of indirect tax which is paid by the buyers or customers to the sellers, manufacturers and various service providers. This payment then is directly credited to the government’s account. It is, in other words, a value-added tax that is inclusive to the purchase of an item. 

Prior to GST, every state of India used to have a specific taxation mechanism for indirect taxes. The tax authorities of a particular state would assign a unique Taxpayer Identification Number to sellers or dealers. With the introduction of GST, every individual enterprise is given a unique Goods and Services Tax Identification Number, also known as GSTIN, of which they need to do a yearly GST filing.  

GSTIN consists of a 15 digit identification profile that helps in facilitating the taxation process smoothly. With the help of GSTIN, you can also avail a loan for yourself. 

15 Digit GST Code

For many people, the 15 digit GST code is quite confusing. However, it is not at all that complex. If you want to decode what information your GST code number provides, for instance, the GST state code list, then it is important to understand all the elements involved in it.   

  • The first two digits represent the state code. Each and every state of India gets a unique state code. For instance, the state code number for West Bengal is 19 whereas for Madhya Pradesh it is 23. With the help of a GST state code list, it is easier for the taxation authorities to determine from which state the tax amount is coming.  Also, you can check the GST state code list online to know your state code. 
  • The next 10 digits consist of the Permanent Account Number (PAN) of an individual. 
  • The thirteenth number represents the total number of registrations in the state. 
  • The fourteenth number is automatically assigned as Z. It stands as a surplus for 36 options which can be used in the future where 26 belong to the English alphabet and 10 to the number from 0-10.
  • The fifteenth number is a check digit value to detect any errors in computation. 

These are the details which your GSTIN is composed of. By going through it and after understanding the concepts behind each digit, you will be able to figure out your GST state code list, your PAN number, total number of registrations in the stat and the check digit value. 

GST Benefits 

If getting to know about GST code is important to figure out its operation more thoroughly then so is knowing about the benefits of GST. By being a new taxation system, many people are still not aware of the benefits which can be availed through GST. Some of these benefits are as follows.

  • With the introduction of GST, all the diverse indirect taxation policies have fallen under a single umbrella. This will help the dealer in understanding the structure and calculation of taxation very easily. 
  • In the long run, this can be really money saving as the cascading effect of VAT and other such indirect taxes will be offloaded.
  • The sectors which upto now were unorganised, like the textile industry, now can easily be effectively administered with the introduction of GST.
  • One of the biggest advantages of GST is its easy application procedure. In fact, you can easily apply for a GSTIN through the government’s online portal. 
  • GST takes away the burden from small enterprises to pay VAT, service tax and excise duty.

Once you get hold of the information regarding the GST code and the benefits it overall provides, you will be in the good to keep realistic expectations from your GSTIN. It is also important to keep in mind that you check your GST code once you receive it, by verifying its different components individually.